A vast economic restructuring of the public's electric power supply system is beginning to take place. The restructuring involves replacing the present regulated, fixed price non-competitive economic model by one in which price is determined by market forces. An objective for deregulating electricity should be to put in motion a process that results in the smooth transition from the present regulated status to deregulated markets that resemble, in function, those that exist for most other economic commodities. The integrated marketplace that now exists for many commodities is clearly a most efficient one. A goal for electricity should be to include as many of the aspects that contribute to that efficiency, as is practical for electricity, a commodity that is difficult to store.
Commodity economics requires that prices reflect supply & demand tensions, competitive pressures, quality of product, as well as the cost to produce it. The supply & demand situation is always changing for electricity so its price should fluctuate to counter the potential for excessive supply & demand imbalance. Since electricity must generally be consumed the moment it is produced and is a vital lifeline service, imposing a commodity regime onto the delivery of electricity poses special problems. One approach to pricing electricity commodity style is described in U.S. Pat. No. 5,237,507.
What seems clear now is that there is no surefire approach to making electricity into a practical market-based commodity. Hence any new metering infrastructure being considered should have flexibility to support a number of possible advanced economic models. An approach now being taken to introduce competition would leave the existing metering infrastructure untouched and would achieve consumer choice through a corporate restructuring that separates existing utility generator assets from its other assets and would encourage competitors to enter by giving them the right to share existing Transmission & Distribution (T&D) facilities.
Sharing T&D requires some form of load balancing or apportionment of load among the competing suppliers, depending on the demand of all their customers of record. The method generally being suggested for achieving this relies on an independent system operator and uses historic load profiles from which the typical demand for each competitor's customers is projected for every hour of every day. However the use of historic load profiles to anticipate real-time demand for load balancing between intense competitors, that must share common T&D facilities, is fraught with unpredictable negative possibilities, particularly if prices were to fluctuate hourly, as they would in any advanced economic model.
Implementing true real-time load balancing based on the actual near real-time demand of each supplier's consumers of record would be desireable, if it could be done at reasonable cost. Such an approach would put less reliance on the need for skilled central management by an independent system operator and more on free market forces to keep prices honestly competitive.